There are two projects, A and B. the following probability distribution for the projects are given below A B Initial Investment $9,000 $9,000 Annual rate of return Return Prob. Return Prob. Pessimistic 9% 0.25 11% 0.30 Most Likely 15 0.50 18 0.45 Optimistic 25 0.25 23 0.25 a. Compute expected rate of return for each project. b. Compute variance and standard deviation of rate of return for each project. c. compute the coefficient of variance. Which project should you take? C.

There are two projects, A and B. the following probability distribution for the projects are given below A B Initial Investment $9,000 $9,000 Annual rate of return Return Prob. Return Prob. Pessimistic 9% 0.25 11% 0.30 Most Likely 15 0.50 18 0.45 Optimistic 25 0.25 23 0.25 a. Compute expected rate of return for each project. b. Compute variance and standard deviation of rate of return for each project. c. compute the coefficient of variance. Which project should you take? C.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5TP: Giorgio Co. is looking at an investment project with an internal rate of return of 10.8%. The...

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